UNIONS VS. THE ECONOMY
http://www.awb.org/news/newsletter/1102/p4doncolumn1102.htm
   High Energy Costs No Longer Offset High Labor Costs
(Washington Business - November 2002)
UNIONS, AMERICAS' TOP EXPORTER, OF JOBS

The Puget Sound region has lost more than 97,000 jobs over the last 20 months, and Washington’s unemployment rate is 7.4 percent – 32 percent higher than the national average.

One reason is labor costs. Washington’s labor costs are high and, as difficult as it will be, the Governor and Legislature must take a hard look at that before it’s too late.

We’re not talking about doing away with family-wage jobs. Good-paying jobs are a vital part of a prosperous state. But labor costs include more than just salaries. Unemployment taxes, insurance costs, and workers’ compensation premiums add another 30-percent to the cost of each employee. Bringing those costs under control would go a long way toward restoring our state’s economy while protecting good wages.

Labor unions might argue that Washington’s high wages haven’t prevented the state from enjoying economic prosperity in the past. True. But those high wages were offset by cheap electricity. In the wake of last year’s drought, those days are gone.

Just take a look at Washington’s aluminum industry. Historically, one of our state’s best source of high-paying union jobs, the state’s aluminum industry has been virtually wiped out by expensive electricity and high wages.
UNIONS, AMERICAS' TOP EXPORTER, OF JOBS

One of the few plants still operating is Goldendale Aluminum, along the Columbia River. But Goldendale needed concessions on power rates and labor costs to restart. Of course, companies can negotiate such concessions on a case-by-case basis, but the problem is much deeper. Unless it is tackled in the 2003 Legislature, we can watch our competitiveness slip away.

Here is what needs to be done in the 2003 Legislature:

1. Overhaul the state’s unemployment system. Unemployment insurance taxes will go up an average of 15 percent in January. Regardless of the outcome of Referendum 53 on Nov. 5, the system is broken and needs to be fixed.

 People who voluntarily quit, no matter what the reason, should not receive unemployment benefits.  
 Unemployment funds should not be diverted to programs which do not relate to paying benefits for those who lost their job through no fault of their own.  
 Legislators need to abandon ideas of adding more costs by paying family-leave benefits from unemployment insurance taxes.

2. Reform the Workers Compensation system. The Department of Labor and Industries (L&I) proposes an average 40 percent increase in workers comp taxes in January. Part of the problem can be traced to an under performing stock market – but only part. Vague court decisions have overturned decades of practice, expanded eligibility, and caused endless rounds of lawsuits seeking to clarify the rulings.

 The Governor and Legislature need to clarify how workers’ comp benefits should be calculated.  

3. Overturn our state’s minimum wage initiative. Automatic annual hikes in the minimum wage are making our state uncompetitive in rural border communities and drying up entry-level and secondary jobs. A minimum wage in Seattle may be absorbed, but in Clarkston, it eliminates jobs and employers.

 Legislators should pass a differential minimum wage (similar to the existing prevailing wage statute) for vulnerable employers in marginal communities.

These suggestions are not new. In fact, many of them are included in the Governor’s own competitiveness report and have been identified by the Washington Alliance for a Competitive Economy (WashACE), the coalition AWB co-founded with the Washington Research Council and the Washington Roundtable.

These suggestions will not sit well with labor unions, but labor leaders need to make a choice. Do they want to keep the status quo, including record jobs losses and unemployment? Or will they work with the Governor, legislators, and employers to retain high-paying family-wage jobs?

We’ll have their answer when the Legislature reconvenes in January.